Moody’s Investors Service in a new report that the eight Indonesian property developers, seven will likely have the capacity to absorb a higher interest burden at their current rating levels.
The higher costs will weaken interest coverage of rated developers but only Lippo Karawaci Tbk (B3 negative) does not have the capacity to absorb a higher interest burden at its current rating.
As of 30 September 2018, around 30% of the developers’ aggregated debt would mature from the fourth quarter of 2018 through 2020.
The Intiland Development Limited Tbk (B2 stable) had around 70% of debt maturing in this period. While, Alam Sutera Realty Tbk (B2 negative) and Sentul City Tbk (B2 stable) each had around 50%, Pakuwon Jati, Tbk (Ba2 stable) and Agung Podomoro Land (B1 stable) each had around 30%.
In Addition, Bumi Serpong Damai Tbk (Ba3 positive) and Lippo Karawaci each had around 15%, and Modernland Realty Tbk (B2 stable) had less than 5%.
The remaining companies’ pro-forma interest burden will increase between 1% and 10%. However, Moody’s expects Alam Sutera to have the capacity to absorb a higher interest burden because its interest coverage was the strongest among the B-rated companies to begin with.